MALAYSIA is currently in a tricky position, fiscally speaking. Fitch Solutions Country Risk and Industry Research recently revised its 2021 fiscal deficit forecast for the country to 7.4% of GDP, up from 6.4% previously.
This largely stems from decreased revenue and increased stimulus spending to kickstart the economy from a pandemic-induced slump.
As such, given Malaysia’s tight fiscal space, Malaysians should by large be wary about expecting too much from the government in the short term. Of primary concern is the upcoming budget, which is set to be the first litmus test for the newly minted prime minister.
There has been plenty of talk about the budget being the main catalyst for the economy as we move into the post-Covid-19 new normal.
As such, all quarters of society are clamouring to have their voices and aspirations heard.
The government, to its credit, has been hard at work listening to numerous sectors and grassroots sentiments on the budget.
Post-pandemic economic restoration will require the government to spend plenty on development projects, social security, healthcare and other socio-economic programmes.
Nothing in the world is free and the government will have to pick and choose carefully which sectors need to be prioritised.
Cursorily, the sectors most in need of government aid are retail, hospitality and tourism.
In terms of social welfare, the B40 and miskin tegar (hardcore poor) categories are the most vulnerable in the population that most desperately need government help and subsidies.
As such, it is highly likely that government expenditure will be targeted towards those that need it the most.
To its credit, the government has spent roughly RM30 billion in the past 20 months to help put food on the table for vulnerable segments, more than RM18 billion for wage subsidies to retain jobs and over RM6 billion as grants for micro small and medium-sized enterprises (mSME); not to mention billions of ringgit for other fiscal spending comprising job creation, reskilling and upskilling, food basket programmes, vaccination, on-boarding SME digitally, soft loans and electricity discounts, to name a few.
What I am pleading for the public to realise is that resources are finite and as such the government will need to prioritise its efforts.
Economies everywhere, including ours, are set to present deficit budgets, but in doing so it is not a silver bullet that ensures everyone gets what they have asked for.
A deficit budget simply means that we do not earn enough to fund our needs, which must be financed through borrowings.
The more we borrow, the bigger the debt burden on our children and grandchildren.
As responsible citizens, we should also be pertinently aware of our obligations to our country in terms of paying our taxes on time and in full.
As it were, our tax base is still incredibly narrow and if despite this, we fail to pay our taxes the government would not be able to assist the rakyat and businesses in Malaysia.
Balancing public expectations within a tight fiscal space is tricky, but it is what the government is there for.
It is, however, not a ticket for the government to stop working hard for the rakyat.
They still need to be held accountable and formulate longer term plans that would positively impact other sectors of the economy and society which may not need immediate attention.
To this end, I laud the government’s move to introduce the Fiscal Responsibility Act in 2022.
Right now, it is up to us the rakyat to do our part in ensuring that no pandemic will have a stranglehold on our economy, by adhering to the standard operating procedures to contain the spread of the virus.
It is the least we can do to honour the immense sacrifice of our frontliners, quite a few of whom have lost their lives to Covid-19 during their call of duty.
The country cannot afford another wave of infections which is sure to hit our fiscal pockets hard. I hope that this sentiment travels into the coming months as the budget is unveiled.
Source: https://www.thesundaily.my/local/let-s-get-real-about-the-economy-XA8507415